Avita Medical Second Quarter Fiscal 2019 Quarterly Cash Flow Report and Company Update

Transcription

1 ASX/News Release Avita Medical Second Quarter Fiscal 2019 Quarterly Cash Flow Report and Company Update Recent Highlights Pre-launch U.S. product sales of A$1.1 million in second quarter Successful preparation for U.S. national market launch in January abstracts highlighting RECELL System clinical and economic benefits accepted for presentation at multiple burn conferences, including the American Burn Association (ABA) 51 st Annual Meeting A$41.7 million equity financing provide resources for U.S. launch and pipeline expansion Valencia, Calif., USA, and Melbourne, Australia, 31 January 2019 AVITA Medical (ASX: AVH, OTCQX: AVMXY), a global regenerative medicine company, announced that it filed today with the ASX its Appendix 4C - Quarterly Cash Flow Report for the quarter ended 31 December Provided below is an update regarding the substantial accomplishments achieved during the second fiscal quarter, including the first U.S. commercial sales of the RECELL Autologous Cell Harvesting Device (RECELL System) for the treatment of acute thermal burns. First U.S. Commercial Sales of RECELL System and U.S. National Market Launch During the quarter ended 31 December 2018, the Company s primary commercial focus was preparing for the January 2019 U.S. national market launch of the RECELL System. Key commercial achievements during the quarter included recruiting, hiring and training a highly experienced sales team of 20 professionals, the receipt of American Burn Association (ABA) issued reimbursement coding guidelines within one week of U.S. Food and Drug Administration (FDA) approval, and commercial product availability within two weeks of approval. In advance of the January 2019 U.S. national market launch and without any direct promotional effort, the clinical and economic benefits of the RECELL System generated strong interest from burn centers and greater than expected sales orders. Product sales and other revenues for the quarter and six months ended 31 December 2018 were as follows (unaudited and provided in advance of completion of Company s Mid- Year Report to be filed in Appendix 4D): Three Months Ended Six Months Ended (In thousands of AUD) 31 December 31 December U.S. Product Sales $1,102 $ - $1,102 $ - International Product Sales Total Product Sales 1, , BARDA Revenue 2,456 2,040 5,009 3,857 Total Revenue $3,901 $2,358 $6,822 $4,465

2 We are excited that in advance of our U.S. national market launch in January 2019 the patient benefits and cost savings associated with the RECELL System resulted in strong commercial sales during the first three months after FDA approval, said Dr. Mike Perry, Chief Executive Officer. We look forward to reporting our progress through 2019 as we begin to see the results of the U.S. national launch and the deployment of our full sales team of 20 professionals. RECELL System Clinical Results Featured in 26 Presentations at Early 2019 Burn Conferences 26 abstracts highlighting the clinical and cost savings benefits of the RECELL Autologous Cell Harvesting Device (RECELL System) have been selected for presentation at four burn conferences in early Nine of the presentations will be made at the largest burn conference, the American Burn Association (ABA) 51st Annual Meeting to be held in Las Vegas April 2-5, 2019, including a Top-Five Abstract presentation in plenary session. These abstracts build upon and greatly advance the pivotal clinical trial results and health economic data presented at last year s ABA meeting and will highlight the positive clinical outcomes that burn surgeons have observed in a broad range of patients and burn types. In January 2019 eight presentations were made at the North American Burn Society 37 th Annual Conference held in Park City, and one presentation was made at the LA-ACS/SAL Annual Meeting in New Orleans, further supporting the clinical and economic benefits of the RECELL System. In addition to the strong interest from major burn conferences, results from the Company s second pivotal clinical trial of the RECELL System full-thickness burns were published in Burns, a major peer-reviewed journal. The clinical results reflected in the 26 abstracts and the Burns publication further expand the body of scientific materials demonstrating that the RECELL System is a major innovation in the treatment of burn patients. Funding and technical support for the development of the RECELL System was provided by the Biomedical Advanced Research and Development Authority (BARDA), under the Assistant Secretary for Preparedness and Response, within the U.S. Department of Health and Human Services, under ongoing USG Contract No. HHSO C. Programs included in the above abstracts and publication which were funded under the BARDA contract include the two randomized, controlled pivotal clinical trials, the Compassionate Use and Continued Access programs, development of the health economic model demonstrating the cost savings associated with the RECELL System, and two randomized, controlled clinical trials in pediatric burn patients. Second Quarter Fiscal 2019 Financial Results (Unaudited) (All amounts are in thousands of AUD except where noted) A copy of the - Quarterly Cash Flow Report for the second quarter of fiscal 2019, the quarter ended 31 December 2018, is attached. Operations for the quarter were focused primarily on preparation for the U.S. national market launch of the RECELL System which occurred in January 2019, the commencement of product shipments in the U.S. after the September 2019 FDA approval of the RECELL System for the treatment of burns, limited commercial sales efforts in selected markets in which the RECELL System is approved for sale, and the preparation and conduct of further clinical development of the RECELL System. During the quarter ended 31 December 2018, total cash receipts were $2,833, a decrease of $1,643 or 37% comparted to the prior quarter ended 30 September Cash receipts from customers for the quarter ended 31 December 2018 were $858, an increase of $511 or 147% compared to the prior quarter due to the commencement of U.S. product sales. Cash received from BARDA during the current quarter totalled $1,975,

3 a decrease of $1,643 or 40% compared to the prior quarter. The decrease was the result of a one-time rate adjustment that was received during the quarter ended 30 September Through 31 December 2018, cumulative payments of $22.64 million have been received under the BARDA contract. As the result of investments in commercial, manufacturing, and system capabilities for the U.S. market launch of the RECELL System and related initiatives, overall payments for operating expenses increased during the second quarter of fiscal During the quarter ended 31 December 2018, payments related to sales and marketing, staffing, administrative and corporate costs for the current quarter totalled $8,967, a $2,158 or 32% increase compared to the quarter ended 30 September The increase was primarily due to the hiring of the U.S. sales force for the RECELL System and related activities. This increase is partially offset by payments for research and development, manufacturing and operating costs which during the current quarter totalled $1,923, a $628 or 25% decrease compared to the quarter ended 30 September The decrease was the result of the wind-down of certain activities associated with supporting the U.S. FDA approval of the RECELL System as well as the Compassionate Use and Continued Access programs. As a result of the national launch of the RECELL System in the U.S. in January 2019, and the expansion of research and development, payments for operating expenses will increase in future quarters. These expense payments will be partially offset by receipts from customers and receipts under the BARDA contract. Total net cash used in operating activities during the quarter ended 31 December 2018 was $6,583, a $2,763 or 72% increase compared to the quarter ended 30 September The current quarter decrease in net cash used in operating activities resulted from the decrease in total cash receipts combined with the increase in payments for operating expenses, partially offset by the $1,421 research and development tax credit received. During the quarter ended 31 December 2018, net proceeds provided by Tranche 1 of an institutional placement of shares to U.S., Australian and international institutional and sophisticated investors was $22,268. Cash and cash equivalents held at 31 December 2018 was $30,342. Including the net proceeds of $13,829 and $1,765 received in January 2019 from Tranche 2 of the institutional placement and from a share purchase plan, respectively, the pro forma cash and cash equivalents balance at 31 December 2018 was $45,936. Future cash requirement will be dependent upon the success of AVITA Medical s efforts to commercialize the RECELL System, particularly in in the U.S., and the timing and magnitude of clinical and other research and development programs the Company elects to undertake to expand its product pipeline. Until such time that the Company generates sufficient cash flow from operations, it expects to fund its future cash requirements through a combination of current cash resources, and potentially the issuance of shares and debt financing. ABOUT AVITA MEDICAL LIMITED ### AVITA Medical is a regenerative medicine company with a technology platform positioned to address unmet medical needs in burns, chronic wounds, and aesthetics indications. AVITA Medical s patented and proprietary collection and application technology provides innovative treatment solutions derived from the regenerative properties of a patient s own skin. The medical devices work by preparing a REGENERATIVE EPIDERMAL SUSPENSION (RES ), an autologous suspension comprised of the patient s skin cells necessary to regenerate natural healthy epidermis. This autologous suspension is then sprayed onto the areas of the patient requiring treatment.

4 AVITA Medical s first U.S. product, the RECELL System, was approved by the U.S. Food and Drug Administration (FDA) in September The RECELL System is indicated for use in the treatment of acute thermal burns in patients 18 years and older. The RECELL System is used to prepare Spray-On Skin Cells using a small amount of a patient s own skin, providing a new way to treat severe burns, while significantly reducing the amount of donor skin required. The RECELL System is designed to be used at the point of care alone or in combination with autografts depending on the depth of the burn injury. Compelling data from randomized, controlled clinical trials conducted at major U.S. burn centers and real-world use in more than 7,000 patients globally, reinforce that the RECELL System is a significant advancement over the current standard of care for burn patients and offers benefits in clinical outcomes and cost savings. Healthcare professionals should read the INSTRUCTIONS FOR USE - RECELL Autologous Cell Harvesting Device ( for a full description of indications for use and important safety information including contraindications, warnings and precautions. In international markets outside of Europe, our products are marketed under the RECELL System brand to promote skin healing in a wide range of applications including burns, chronic wounds and aesthetics. The RECELL System is TGA-registered in Australia, CFDA-cleared in China, and received CE-mark approval in Europe. To learn more, visit CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This letter includes forward-looking statements. These forward-looking statements generally can be identified by the use of words such as anticipate, expect, intend, could, may, will, believe, estimate, look forward, forecast, goal, target, project, continue, outlook, guidance, future, other words of similar meaning and the use of future dates. Forward-looking statements in this letter include, but are not limited to, statements concerning, among other things, our ongoing clinical trials and product development activities, regulatory approval of our products, the potential for future growth in our business, and our ability to achieve our key strategic, operational and financial goal. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Each forwardlooking statement contained in this letter is subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statement. Applicable risks and uncertainties include, among others, the timing of regulatory approvals of our products; physician acceptance, endorsement, and use of our products; failure to achieve the anticipated benefits from approval of our products; the effect of regulatory actions; product liability claims; risks associated with international operations and expansion; and other business effects, including the effects of industry, economic or political conditions outside of the company s control. Investors should not place considerable reliance on the forward-looking statements contained in this letter. Investors are encouraged to read our publicly available filings for a discussion of these and other risks and uncertainties. The forward-looking statements in this letter speak only as of the date of this release, and we undertake no obligation to update or revise any of these statements.

5 FOR FURTHER INFORMATION: OUS Media Monsoon Communications Sarah Kemter Phone +61 (0) Mobile +61 (0) Investors: Westwicke Partners Caroline Corner Phone AVITA Medical Ltd Dale A. Sander Chief Financial Officer Phone

6 +Rule 4.7B Introduced 31/03/00 Amended 30/09/01, 24/10/05, 17/12/10, 01/09/16 Name of entity Avita Medical Limited ABN Quarter ended ( current quarter ) December 2018 Consolidated statement of cash flows 1. Cash flows from operating activities 1.1 Receipts from customers 1.1a Receipts from government contract (BARDA) 1.2 Payments for (a) research and development (b) product manufacturing and operating costs Current quarter Year to date (6 months) 858 1,205 1,975 6,104 (1,569) (3,095) (354) (1,379) (c) advertising and marketing (2,064) (3,997) (d) leased assets (362) (514) (e) staff costs (3,842) (7,355) (f) administration and corporate costs (2,699) (3,910) 1.3 Dividends received 1.4 Interest received Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Government grants and tax incentives 1,421 2, Other (provide details if material) 1.9 Net cash used in operating activities (6,583) (10,403) + See chapter 19 for defined terms 1 September 2016 Page 1

7 Consolidated statement of cash flows 2. Cash flows from investing activities 2.1 Payments to acquire: (a) property, plant and equipment (b) businesses (see item 10) (c) investments (d) intellectual property (e) other non-current assets 2.2 Proceeds from disposal of: (a) property, plant and equipment (b) businesses (see item 10) (c) investments (d) intellectual property (e) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other (provide details if material) Current quarter Year to date (6 months) (382) (722) 2.6 Net cash used in investing activities (382) (722) 3. Cash flows from financing activities 3.1 Proceeds from issues of shares 3.2 Proceeds from issue of convertible notes 3.3 Proceeds from exercise of share options 3.4 Transaction costs related to issues of shares, convertible notes or options 3.5 Proceeds from borrowings 3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (provide details if material) 24,804 28,054 (2,536) (2,745) 3.10 Net cash from financing activities 22,268 25,309 + See chapter 19 for defined terms 1 September 2016 Page 2

8 Consolidated statement of cash flows 4. Net increase in cash and cash equivalents for the period 4.1 Cash and cash equivalents at beginning of quarter/year to date 4.2 Net cash used in operating activities (item 1.9 above) 4.3 Net cash from used in investing activities (item 2.6 above) 4.4 Net cash from financing activities (item 3.10 above) 4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of quarter Current quarter Year to date (6 months) 14,122 14,825 (6,583) (10,403) (382) (722) 22,268 25, ,333 30,342 30, Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts Current quarter Previous quarter 5.1 Bank balances 30,342 14, Call deposits Bank overdrafts Other (provide details) Cash and cash equivalents at end of quarter (should equal item 4.6 above) 30,342 14, Payments to directors of the entity and their associates Current quarter $A' Aggregate amount of payments to these parties included in item 1.2 (279) 6.2 Aggregate amount of cash flow from loans to these parties included in item Include below any explanation necessary to understand the transactions included in items 6.1 and Executive Director remuneration (169k), Directors fees (64k), Clinical Advisory Board fees (11k), and Bioscience Consultancy (35k) + See chapter 19 for defined terms 1 September 2016 Page 3

9 7. Payments to related entities of the entity and their associates 7.1 Aggregate amount of payments to these parties included in item Aggregate amount of cash flow from loans to these parties included in item 2.3 Current quarter $A' Include below any explanation necessary to understand the transactions included in items 7.1 and Financing facilities available Add notes as necessary for an understanding of the position 8.1 Loan facilities 8.2 Credit standby arrangements 8.3 Other (please specify) Total facility amount at quarter end Amount drawn at quarter end 8.4 Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well. 9. Estimated cash outflows for next quarter 9.1 Research and development 1, Product manufacturing and operating costs Advertising and marketing 1, Leased assets Staff costs 5, Administration and corporate costs 1, Other (provide details if material) 9.8 Total estimated cash outflows* 9,900 * Pertains to outflows only, inflows from customer receipts and government contracts, which totalled $2,833 for the quarter ended 31 December 2018 and are expected to increase in future quarters, are not included. + See chapter 19 for defined terms 1 September 2016 Page 4

10 10. Acquisitions and disposals of business entities (items 2.1(b) and 2.2(b) above) 10.1 Name of entity 10.2 Place of incorporation or registration 10.3 Consideration for acquisition or disposal 10.4 Total net assets 10.5 Nature of business Acquisitions Disposals Compliance statement 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A. 2 This statement gives a true and fair view of the matters disclosed. Dale Sander Dale Sander Chief Financial Officer 31 January 2019 Notes 1. The quarterly report provides a basis for informing the market how the entity s activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report. 2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standard applies to this report. 3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity. + See chapter 19 for defined terms 1 September 2016 Page 5